Frederick’s of Hollywood Group Inc. reported a wider first-quarter loss despite a gain in revenues because of its merger with wholesaler Movie Star Inc.
For the quarter ended Oct. 25, the New York-based firm’s net loss available to common shareholders equaled $5.3 million, or 20 cents a share, compared with a loss of $3.9 million, or 33 cents a share, in last year’s period. The number of the company’s outstanding shares more than doubled between the periods.
Sales in the three months grew 14.5 percent to $42.6 million from $37.2 million a year ago. The intimate apparel company said the increase was the result of $9.4 million in net sales from the wholesale division following the merger, which closed on Jan. 28, offset by a $4.1 million decrease in retail sales, to $33.1 million.
“As we anticipated, our first-quarter results were significantly impacted by an unprecedented negative macroeconomic environment,” said executive chairman Peter Cole. “In response, we are continuing to reduce operating expenses, primarily through reductions in personnel.”
Cole said the company has trimmed about 15 percent of its domestic workforce and transferred some of its manufacturing support functions to the Philippines. The cuts have resulted in annualized net salary savings of $3.8 million, Cole said.
The company expects to have a new e-commerce system in operation early next year.
Frederick’s of Hollywood’s stock dropped 1 cent to 22 cents Thursday.
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